Exb-2

COMPARISION OF RETAIL SALES OS COFFEE (US$Millions)

1990
Ground Regular
Ground Decaffeinated
Ground Specialty
Instant Regula
Instant Decaffeinated
Whole Bean
Ready to Drink
TOTAL

1994
2050
650
810
1175
385
255
5
5330

1998E
1240
575
1315
1010
295
380
250
5065

1990-94 growth
%
800
-11.8
450
-3
1635
12.9
780
3.7
170
6.4
500
10.5
1255
165.9
5590
-1.3

illions)

1994-1998E
growth%
10.4
5.9
5.6
6.3
12.9
7.1
49.7
2.5

Exb-3

COFFEE CHAINS STOCK PRICES AND MARKET CAPS

Year
Company

High ($)

Low ($)

US Companies

Brothers
Coffee People
Diedrich
Green Mountain
Starbucks

4.63
9.38
12
7.5
40.25

2.13
6
3
6.88
21.5

4.8
28.35
13.35

3.3
18.5
9.15

Canadian Companies

Cara
Van Houtte
Second Cup
COMPARING THE COFFEE CHAINS
Company
TEV(1)/EBITDA(2)
US Companies

Brothers
Coffee People
Diedrich
Green Mountain
Starbucks
Average

Net Margin%

6
8.4
15.6
7.3
25.1
14.5

-14
1.7
1.2
3.3
6

7.7
7.8
13.2
17.9

5.8
4.7
-3.7

Canadian Companies

Cara
Van Houtte
Second Cup
Average

(1) Total enterprise value = Current Market Cap + Debt - Cash

(2) EBITDA for Brother & Diedrich is trailing 12 months

Market Cap
$ Mn
30.8
21.4
23.6
24.8
2438.5
440.2
225.6
137.2

Exb-4
Cash investment
Store BuildOut
Pre-opening
Beginning Inventory
Total Cash Investment
Average Sales per store
Average Sales/Investment
EBIT Margin
EBIT
ROI (EBIT/Cash Invested)

ANALYSIS OF UNIT ECONOMIC TRENDS

1994
1995
1996
330
16
17
363
820
2.3
18.9%
155
43%

357
23
20
400
820
2.1
17.5%
144
36%

315
21
24
360
850
2.4
16.5%
140
39%

1997
310
20
20
350
825
2.4
18.0%
149
42%

US$ Thousands
1998 1999E
305
20
20
345
790
2.3
17.8%
141
41%

300
20
20
340
765
2.3
17.6%
135
40%

Exb-5

PROJECTED PACIFIC RIM DEVPT

US$ Millions
1997
1998 1999E
2000E
New Units
13
30
55
100
Ending Units
15
45
100
200
Average Unit Volume
1
1
1
1
Total Sales
9
30
73
150

Exb-6
Projected avenues of Growth-Estimated Contribution from Joint Venture (US$millions)
1995
Annual Investment

Ice Cream
Botteled Be
Whole Bean
TOTAL
Retail Revenues

Ice Cream
Botteled Be
Whole Bean

1996

TOTAL
Joint Venture

1998E

1999E

0
1.2
0
1.2

0.9
2.7
0

2
18
3
30

1
15
5
33

0.5
10
9.5
35

0
0
0
0

15
0
0
15

40
65
1.3
114.8

45
250
43
368.8

50
300
78
501.3

0
-1.2
0
-1.2
-1.2

-0.7
-0.4
0
-1.1
-1.1

0.5
-0.5
-0.5
-1.5
-1.5

2.4
4.4
1.6
8.4
8.4

3
7.9
4.5
15.4
15.4

TOTAL
Contribution to Starbucks Earnings

Ice Cream
Botteled Be
Whole Bean

1997E

Exb-7
INCOME STATEMENT

(US$ thousands)
1994

1995

1996

1997E

Net Revenues
Retail
Specialty Sales
Direct Response
Total Net Revenues
Store Operating Expenses
Other Operating Expenses
Cost of sales and related occupancy cost
Operating income
Other expenses
Earnings before income taxes
Income Taxes
Net Earnings
Preferred Stock Dividends Accrued
Net Earnings Available to Common Shareholders
Net Earnings Per Share
Weighted Average Shares Outstanding
Average Share Price
Price Earnings Ratios

248,453 402,874 600,367 827,003

26498
47917
78702
110331
9972
14422
17412
22066
284,923 465,213 696,481 959,400
90087
148757
210693
296200
8698
13932
19787
24200
162840
262408
409008
54800
23298
40116
56993
90200
-5544
3027
11508
3600
17754
43143
68501
93800
7548
17041
26373
36100
10206
26102
42128
57700
-270
0
0
9936.00 26102.00 42128.00 57700.00
0.17
0.36
0.47
0.70
57575.00 71909.00 80831.00 88600.00
25
15
24
148
42
51
51

1998E

1999E

1,053,796 1,276,840
148612
193552
25792
30008
1,228,200 1,500,400
368700
441800
31800
40200
687000
827700
140700
190700
-2600
-7000
138100
183700
53200
70700
84900
113000
84900.00 11300.00
1.00
1.30
89500.00 90400.00
36

28

Exb-8

FORECAST OF STARBUCKS' EPS,PE RATIO AND SHARE PRICE

Robinson-Humphery Company Inc

EPS
P/E Ratio (Times)
Forecasted Share Price
Alex Brown & sons

EPS
P/E Ratio (Times)
Forecasted Share Price
Painwebber Inc

EPS
P/E Ratio (Times)
Forecasted Share Price

WilliamBlair & Co.

EPS
P/E Ratio (Times)

1996

1997E

$0.54 $0.70
55.6
42.9
30.024 30.03
1996

$0.48

1996

$.47

1997E

$0.7

$1
30
$49
1998E

$.98
39
27.8
$45

1997E

$.7

1998E

$.95
40.5

1996

1998E

1997E

30

1998E

$.47
$.7
$1
76.1
51.1
35.8

Exb-9
Balance sheet
1994

1995

1996

8394
5394
56064
14728
84580
140754
6087
231421

20944
9852
123657
50897
205350
244728
18100
468178

126215
17621
83370
112335
339541
369477
17595
726613

9128
31290
40418
81105

28668
42378
71046
84901

38034
63057
101091
173862

89861
20037
109898
231421

265679
46552
312231
468178

361309
90351
451660
726613

1994

1995

1996

248453
26498
9972
284923
90087
8698
162840
23298
-5544
17754
7548
10206
-270

402874
47917
14422
465213
148757
13932
262408
40116
3027
43143
17041
26102

600367
78702
17412
696481
210693
19787
409008
56993
11508
68501
26373
42128

ASSETS
Current assets
Cash and cash equivalents
accounts recievable
inventories
other current assets
Total current assets
property and equipment, net
other assets
total assets

LIABILITIES AND SHAREHOLDERS' EQUITY

current liability
accounts payable
other current liabilities
total current liabilities
other liability
shareholders' equity:
common stocks
Retaned earnings
total shareholders' equity
total liabilities (change this name)
Exb-7
Income Statement
Net revenues
retail
specialty stores
direct response
total net revenue
store operating expenses
other operating expenses
cost of sales and related occupancy costs
operating income
other expenses
earnings before income taxes
income taxes
net earnings (PAT)
preferred stock dividends accured

net earnings available to common

shareholders
net earning per share
weighted average shares outstandings
average share price
price earnings ratio

9936
0.17
57575
25
148

26102
0.36
71909
15
42

42128
0.47
80831
24
51

US$ Thousands
1999

1997

1998

128900
24300
122500
12500
288200
496700
43100
828000

53200
31100
149600
16100
250000
617600
78100
945700

21000
38000
178100
19600
256700
733600
121100
1111400

134100

165800

198100

519400

604300

717200

828000

945700

1111400

1997
827003
110331
22066
959400
296200
24200
548800
90200
3600
93800
36100
57700

US$ Thousands
1998
1999
1053796
148612
25792
1228200
368700
31800
687000
140700
-2600
138100
53200
84900

1276840
193552
30008
1500400
441800
40200
827700
190700
-7000
183700
70700
113000

57700
0.7
88600

84900
1
89500

113000
1.3
90400

51

36

28